Heshejin v. Rostami

• Decision Date: 22 September 2020
• Docket Number: B297037
• Court: California Court of Appeals Court of Appeals
• Parties: Behnam HESHEJIN et al., Plaintiffs and Appellants, v. Rami ROSTAMI et al., Defendants and Respondents.

54 Cal.App.5th 984

268 Cal.Rptr.3d 836

Behnam HESHEJIN et al., Plaintiffs and Appellants,

v.Rami ROSTAMI et al., Defendants and Respondents.

B297037

Court of Appeal, Second District, Division 7, California.

Filed September 22, 2020

Gutierrez, Preciado & House and Calvin House, Pasadena, for Plaintiffs and Appellants.

Novian & Novian, Farhad Novian and Andrew B. Goodman, for Defendants and Respondents.

FEUER, J.

Behnam Heshejin, Eric Anvari, the Hestfam Family Trust, and trustee David A. Enzmann (plaintiffs) appeal from an order of dismissal entered as to American Investment Group, LLC (AIG), Avalon Cold Storage, LLC (Avalon), and AIG's director and managing member Rami Rostami (collectively, AIG defendants) after the trial court sustained without leave to amend the AIG defendants’ demurrer to plaintiffs’ second amended complaint. The second amended complaint asserted derivative causes of action on behalf of American Logistics International, LLC (ALI) against AIG for conspiracy to commit fraud, fraud by concealment, breach of fiduciary duty, declaratory relief, conversion, and accounting.

The trial court held plaintiffs lacked standing to assert double derivative claims¹ on behalf of ALI based on their minority ownership interest in ALI's parent company and sole owner, Mazkat Ventures, LP (Mazkat); plaintiffs failed to assert the claims on behalf of ALI in a compulsory cross-complaint ( Code Civ. Proc., § 426.30, subd. (a) )² in American Investment Group, LLC et al. v. Alireza Mahdavi et al. (Super. Ct. L.A. County, 2020, No. BC662347) (AIG v. Mahdavi ); and plaintiffs failed to state facts sufficient to constitute causes of action against the AIG defendants. Because ALI (or plaintiffs on behalf of ALI) failed to file a compulsory cross-complaint in the AIG v. Mahdavi action, we affirm.³

FACTUAL AND PROCEDURAL BACKGROUND

A. Plaintiffs’ Second Amended Complaint

Plaintiffs initiated this action against the AIG defendants and others on February 7, 2018. After the trial court sustained the AIG defendants’ demurrer to the first amended complaint with leave to amend, plaintiffs filed the operative second amended complaint on November 1, 2018. The second amended complaint alleged 12 causes of action, six of which were asserted as derivative causes of action on behalf of ALI against AIG for conspiracy to commit fraud (first cause of action); fraud by concealment (second cause of action); breach of fiduciary duty (third cause of action); declaratory relief (fifth cause of action); conversion (sixth cause of action), and accounting (seventh cause of action).⁴

The second amended complaint alleged plaintiffs are limited partners in Mazkat, with a combined ownership interest of about 19.5 percent. Mazkat in turn wholly owns ALI. American Logistics Advisors, LLC (ALA), is a general partner with a controlling interest in Mazkat. Defendants Ramin Bagherzadeh and Alireza Mahdavi manage and control ALA.⁵ The second amended complaint designated ALI and Mazkat as "nominal defendant[s] for jurisdictional purposes, in a derivative capacity" under Corporations Code section 17709.02.

B. The Joint Venture⁶

In February 2009 ALI received approval to operate as a regional center within the immigrant investor pilot program, known as EB-5. Between February 2009 and November 2018, ALI received about $25 million in investments from individual immigrants ($500,000 each from 50 EB-5 investors) seeking to obtain residence visas for the United States under the program.

Between 2009 and 2013, Bagherzadeh formed 10 or more limited partnerships or limited liability companies, including American Logistics International Warehousing & Distribution, LLC (ALIWD), in July 2011; American Logistics International Cold Storage, LLC (which later became Avalon), American Logistics International Cold Storage, LP (ALI Cold Storage), and American Logistics International Fulfillment, LLC, in May 2013; and American Logistics International Fulfillment, LP (ALI Fulfillment), in July 2013. ALI is the sole owner and general partner of ALI Cold Storage. Since its creation, Bagherzadeh has managed ALIWD. From May 2013 until February 2015 Bagherzadeh was also chief executive officer of Avalon's predecessor company, and he was in charge of operations, marketing, and accounting.

In November 2012 Rostami and Bagherzadeh started discussing a joint venture between ALI and AIG for the creation of a cold storage and fulfillment business (joint venture). The facility would be in the name of ALI Cold Storage with a fulfillment facility under the name of ALI Fulfillment. In May 2013 ALI began to sell partnership interests in ALI Cold Storage and ALI Fulfillment to EB-5 investors for the creation of a cold storage business.

On July 30, 2013 Rostami and Bagherzadeh signed a joint venture agreement on behalf of AIG and ALI, respectively.⁷ Under the agreement, AIG was to invest $6 million in the joint venture. If ALI Cold Storage and ALI Fulfillment failed to generate enough capital from EB-5 investors, then $4.5 million of AIG's investment would be considered a loan to ALI Cold Storage and ALI Fulfillment. In October 2013 Rostami created an operating agreement for Avalon, designating ALI Cold Storage as Avalon's sole owner.

Between July 2013 and January 2015, Rostami caused AIG to invest more than $6 million in the joint venture. In January 2015 Rostami discovered federal immigration authorities had denied the visa applications of many of the EB-5 investors in ALI and the related companies, jeopardizing the joint venture's success. In response, Rostami (for AIG) and Bagherzadeh (for ALIWD) secretly executed three documents: a unit purchase agreement that restructured the joint venture and converted AIG's investment into "equity purchase of shares into [Avalon]," giving AIG a 75 percent ownership interest in Avalon; a second unit purchase agreement under which ALIWD purchased the remaining 25 percent membership interest in Avalon for $2.5 million; and a new operating agreement for Avalon designating AIG and ALIWD as Avalon's only members, in place of ALI Cold Storage.

The second amended complaint alleged these actions were taken by Rostami, Bagherzadeh, AIG, and ALIWD as part of a conspiracy to divest ALI of its partnership interest and rights in the joint venture, and they concealed those efforts from the owners and managers of ALI and Mazkat. Further, Bagherzadeh acted in the interest of AIG, not ALA, Mazkat, or ALI.

C. AIG v. Mahdavi⁸

On May 22, 2017 AIG, Avalon, and American Logistics International Fulfillment, LLC, filed the AIG v. Mahdavi action against Mahdavi, ALI, ALIWD, and others, asserting claims in connection with the joint venture. AIG asserted a cause of action against ALI for breach of contract, and Avalon asserted causes of action against Mahdavi, ALI, and the other defendants for unjust enrichment, allocation and contribution, equitable indemnity, and declaratory relief. The complaint alleged Mahdavi induced AIG to invest in the joint venture, ALI breached the terms of the July 2013 joint venture agreement between AIG and ALI and Avalon's October 2013 operating agreement, and Mahdavi used his position as de facto manager of Avalon to transfer Avalon's assets to himself, ALI, ALIWD, and others.

ALI and Mahdavi, through their attorney, Martin Jacobs, filed an answer on August 1, 2017. Mahdavi did not inform Mazkat or its partners that ALI had been sued. Plaintiffs first learned of the AIG v. Mahdavi action on January 22, 2018 from Rostami's deposition testimony in another lawsuit. On January 23 Jacobs filed a motion to be relieved as counsel. The second amended complaint alleged that even if ALI had informed plaintiffs of the AIG v. Mahdavi action, because of the alleged misconduct of its managers Bagherzadeh and Mahdavi, plaintiffs could not have convinced Bagherzadeh and Mahdavi to direct ALI to file a cross-complaint and any demand would have been futile.

D. Defendants’ Demurrer

The AIG defendants demurred to the first, second, third, fifth, sixth, and seventh causes of action alleged in the second amended complaint, arguing plaintiffs lacked standing to bring derivative claims; plaintiffs’ derivative claims were barred by ALI's failure to file a cross-complaint in the AIG v. Mahdavi action; and the second amended complaint failed to state facts sufficient to constitute the challenged causes of action. The AIG defendants requested judicial notice of the May 22, 2017 complaint filed in AIG v. Mahdavi and ALI's August 1, 2017 answer.

After a hearing, on December 21, 2018 the trial court sustained the AIG defendants’ demurrer without leave to amend. The court also granted the AIG defendants’ request for judicial notice of the complaint and ALI's answer filed in AIG v. Mahdavi action. In its written ruling, the court found plaintiffs lacked standing to assert double derivative claims on behalf of ALI as minority partners of Mazkat; plaintiffs failed adequately to plead their efforts to secure action from ALI's managers or the reasons for not making that effort; plaintiffs’ derivative claims on behalf of ALI were barred by the compulsory cross-complaint rule because ALI filed an answer in the AIG v. Mahdavi action; and plaintiffs’ derivative causes of action were not adequately pleaded.

Plaintiffs timely appealed.

DISCUSSION

A. Plaintiffs’ Appeal Is Timely

On April 15, 2019 plaintiffs filed a notice of appeal purporting to appeal from the trial court's December 21, 2018 "judgment of dismissal" sustaining the demurrer. On June 6, 2019 the AIG defendants filed a motion to dismiss the appeal as untimely, arguing plaintiffs filed their appeal more than 60 days after the AIG defendants served plaintiffs with notice of the trial court's December 21, 2018 order sustaining the demurrer. (See Cal. Rules of Court, rule 8.104(a)(1)(A), (B) [where a party serves the notice of entry of judgment, the notice of appeal must be filed on or before "60 days after the party filing the notice of appeal...